In a significant move aimed at reshaping the global rare earth magnet industry, two American startups have clinched a $1.4 billion deal with the Trump administration and private investors to build a fully domestic supply chain for rare earth magnets. The agreement, announced in early November 2025, is being hailed as a bold step to reduce the United States’ reliance on China, which has long dominated the sector crucial for high-tech and military products.
According to Benzinga, Vulcan Elements and ReElement Technologies, the two startups at the center of this deal, will receive a combination of federal and private funding to construct and operate a U.S.-based rare earth magnet facility. The lion’s share of the funding comes in the form of a $620 million loan from the U.S. Department of War’s Office of Strategic Capital. In addition, the Department of Commerce will provide $50 million, and private investors are set to contribute another $550 million, bringing the total to a staggering $1.4 billion.
This new facility is expected to produce 10,000 metric tons of magnets annually, a major leap forward for domestic production. Vulcan Elements will focus on creating the magnets themselves, while ReElement Technologies will handle the processing of rare earth mineral ores and the recycling of batteries. As Devdiscourse reports, the initiative is not just about manufacturing; it’s also about building a robust, closed-loop supply chain that will support the U.S. economy and national security for years to come.
The timing of this investment is no coincidence. For years, China has maintained a near-monopoly over the global rare earth supply, controlling the lion’s share of mining, processing, and magnet manufacturing. These materials are essential for everything from electric vehicles and smartphones to advanced missile systems and fighter jets. The Trump administration’s decision to back these startups is part of a broader national security strategy to secure domestic supply chains for critical minerals, semiconductors, and steel.
"This move is a clear signal that the U.S. is serious about breaking its dependence on foreign sources for materials vital to our technological and military edge," said a senior official involved in the deal, as cited by Benzinga. The official emphasized that the investment is not just about economics, but about ensuring the country’s strategic autonomy in an increasingly complex geopolitical landscape.
The deal also comes on the heels of several major developments in the rare earth market. Just last month, Pakistan dispatched its first shipment of processed rare earth elements and critical minerals to the United States, marking the launch of a $500 million partnership signed in September 2025. This partnership, as reported by Benzinga, is expected to further diversify America’s sources of rare earths and reduce its vulnerability to supply chain disruptions.
Meanwhile, in August 2025, Energy Fuels Inc. announced a partnership with Vulcan Elements to build a U.S.-based supply chain for rare earth magnets. These efforts collectively underscore a growing sense of urgency within the U.S. government and industry to shore up domestic capabilities and reduce exposure to external shocks.
Interestingly, the Trump administration’s push is not limited to supporting startups. In a parallel move, the government recently acquired stakes in five major publicly traded companies, including a 15% stake in MP Materials, a leading rare earth producer. This marks a notable shift toward direct government involvement in securing critical supply chains—a strategy reminiscent of past industrial mobilizations during times of national need.
Yet, the landscape is shifting rapidly. According to Devdiscourse, the U.S. investment comes at a time when China has agreed to lift its rare earth mineral export restrictions as part of a broader trade agreement with the United States. This development has led to a decline in rare-earth stocks, as investors weigh the prospect of an oversupplied market. However, officials in Washington appear unfazed, viewing the domestic push as a long-term play that will outlast short-term market fluctuations.
For Vulcan Elements and ReElement Technologies, the stakes could hardly be higher. Vulcan’s core mission is to manufacture high-performance magnets that power everything from electric vehicles to wind turbines, while ReElement is pioneering new methods for processing rare earth ores and recycling used batteries. This dual approach—combining new production with recycling—offers a blueprint for sustainable growth in a sector notorious for its environmental challenges.
“We believe that building a closed-loop, domestic supply chain is the only way to ensure the U.S. remains competitive in the 21st century,” said a spokesperson for ReElement Technologies, as quoted by Benzinga. The spokesperson added that the company’s innovative recycling techniques could help minimize waste and reduce the environmental impact of rare earth mining—a concern that has dogged the industry for decades.
There’s also a broader geopolitical dimension to the story. The U.S. investment is unfolding against the backdrop of ongoing trade negotiations and tariff adjustments between Washington and Beijing. By fortifying its own supply chain, the United States is seeking to insulate itself from potential disruptions and strengthen its bargaining position in future talks.
“This initiative is about more than just magnets—it’s about securing the technological backbone of our economy and our military,” said a senior Commerce Department official, as reported by Devdiscourse. “We can’t afford to be caught flat-footed if global supply chains are disrupted.”
Observers note that the U.S. is not alone in its quest for rare earth independence. Other countries, including Japan and members of the European Union, have launched similar initiatives in recent years, reflecting a growing recognition of the strategic importance of these materials. However, the scale and ambition of the U.S. effort—backed by both public and private capital—set it apart from many international counterparts.
Still, challenges remain. Building a domestic supply chain from scratch is a monumental task, requiring not just capital but also technical expertise, regulatory approvals, and a skilled workforce. There are also environmental and community concerns to address, as rare earth mining and processing can be highly disruptive if not managed responsibly.
Yet, for now, the mood among industry insiders is one of cautious optimism. The $1.4 billion deal represents a major vote of confidence in the future of American rare earth manufacturing—and a significant step toward a more resilient, self-reliant supply chain.
As the new facilities break ground and production ramps up, all eyes will be on Vulcan Elements and ReElement Technologies to see if they can deliver on their promise. If successful, their efforts could mark the beginning of a new era for American industry—one in which the U.S. is not just a consumer of advanced technologies, but a producer and innovator in its own right.
